Author: Ralph Morton
Key points from Budget 2012
- 100% first year allowances extended to March 2015
- 100% FYA qualifying band reduced to sub 96g/km CO2 in 2013
- 18% qualifying band reduces from 160g/km CO2 to 130g/km
- 8% qualifying band for all cars over 130g/km
As with company car tax, Budget 2012 pushed the bands for company car writing down allowances – also known as capital allowances – downwards to encourage businesses to buy more fuel-efficient business cars with reduced CO2 emissions.
From April 2012 the main rates for capital allowances change anyway, from 20% to 18%, and from 10% to 8%. But now the Chancellor has moved the CO2 goalposts for the qualifying criteria.
But let’s start with those company cars that qualify for first year writing down allowances (WDA).
100% First Year Allowances
Cars with CO2 emissions up to 120g/km currently qualify for full first year allowances, which helps significantly with accelerating cash flows.
From 01 April 2013, this changes and all cars purchased with emissions up to 95g/km will qualify for the capital allowances tax break.
Main capital allowances tax break
From 01 April 2013, the 18% tax break – currently for cars with CO2 emissions between 111g/km and 160g/km – changes. From that date only purchased company cars with CO2 emissions between 96g/km and 130g/km will qualify.
The 8% capital allowances tax break changes too on 01 April 2013. Currently for cars with CO2 emissions in excess of 160g/km CO2, the tax break will be applicable to all company car and business car finance purchases with CO2 emissions in excess of 130g/km CO2.
